“A world-leading Digital Economy that works for everyone”
THIS morning, Coadec attended the launch of the Government’s long awaited Digital Strategy. The room was filled with guest speakers and attendees from global tech giants, including AWS, Google, Facebook and Samsung, to British success stories, such as Benevolent AI and Raspberry Pi.
Launched at the offices of Entrepreneur First, Europe’s leading pre-seed investment programme, housed in the Biscuit Factory, a selection of the UK’s world-leading tech talent was on full display. The Digital Strategy is equally as impressive in its ambition. Not least the Government’s aim to “create a world-leading digital economy that works for everyone,” by:
As I left the Biscuit Factory, it seemed fitting to pass a large sign for the Arch Climbing Wall, ‘11,000 square feet of bouldering wall, with around 300–400 different routes to attempt.’ A fitting metaphor for the road ahead and scale of the challenge. There are many routes the Government can attempt as we leave the EU, covering the easy routes of each Department tinkering around the edges, or the more challenging route that equally holds the greatest potential: a radical domestic agenda that turns well-intentioned straplines and strategies into bold action, and helps the UK scale to new global heights.
The Digital Strategy (to support the Industrial Strategy) is an important step forward, but its ambitious vision demands reform across the whole of Government, together with the combined efforts of the tech and business communities. Let’s take the chapter, ‘digital skills for all.’ A range of initiatives are listed, including business-led digital skills programmes from Sky, Google, AWS, to name a few. But businesses alone cannot enact the policy change required within our education system to address the critical skills gap, nor solve the huge geographical differences that exist across the UK. For example:
In 2015, fewer than 2% of pupils sat GCSE computing in nine local authorities, and in seven local authorities not a single student took computing A-level: City of London, Enfield, Gateshead, Knowsley, Peterborough, Rutland and Salford.
The bottom 20 local authorities for GCSE pass rates in Maths are concentrated in the North West and the Midlands.
It is estimated that Britain will need an extra 2.287 million digitally skilled workers by 2020 to satisfy the UK’s digital potential, with software developers the most sought-after, accounting for 27 per cent of vacancies.
Yet in England, almost a quarter (24 per cent) of sixth form colleges have dropped STEM courses since 2011 and funding for the 16–19 year budget has been cut in recent years: 14 per cent in real terms since 2011, with a further 8 per cent cut in real terms by the end of this parliament. At the same time, there is widespread concern that the Government will make it harder, not easier, to attract global tech talent.
Coadec’s own data shows that on average, a third of tech startups’ first ten hires come from outside the UK. While most non-EU hires were already in the country — often as students or working for another company. This is why we propose a minimum six-month visa to enter the UK and seek work for those that studied at a particular institutions, or pass a standardised exam in specific programming languages.
Every startup Coadec talks to highlights the need for more STEM skills and access to global talent, not further government reviews. Those companies in AI and data science are particulary worried at the lack of mathematicians and physicists. The only way we are going to be a world-leader is to dramatically increase the pipeline and the proportion of 16–19 year olds doing mathematics and STEM subjects to a high level. Supported by funding for a large-scale expansion in software development apprenticeships. But this cannot happen overnight and must go hand-in-hand with an effective visa system.
The picture is equally as demanding for the UK-wide investment landscape. It’s no surprise that London dominates the equity landscape for tech investments, but in 2016 the total number of private equity and venture investments in growth tech firms dropped 16% in London, with no corresponding increase elsewhere in the UK.
At the domestic level, Westminster Local Authority alone performs better than 60 per cent of local authorities combined, receiving as many tech investments in 2016 as the 207 worst performing local authorities. While more than 77% of accelerator investments in 2016 were in London.
But the potential is clear. At present, the UK has approximately half the digitisation rates of Denmark, which is a digital leader in almost every sector. If the UK achieved parity with Denmark, it would lead to 350,000 more jobs, contributing to £135 billion in GDP. These could be up to 1.8% more digital jobs in healthcare (72,000) and up to 1.3% more digital jobs in both professional services (87,000) and advanced manufacturing (38,000).
For digital job creation, the West Midlands is currently falling behind, together with the North West, Northern Ireland and Wales.
Yet if penetration levels in the lagging regions caught up with the South East (5.4% in 2016), the UK digital sector could create an additional 495,000 jobs by 2025. The highest gains would achieved in East Midlands (108,000 jobs) and West Midlands (64,000 jobs).
These are just a couple of examples taken from Coadec’s new report: A Global Britain, from local startups to international markets.
For this report, we travelled the country to meet UK-wide startups and investors and hear first-hand about the challenges faced. The feedback was clear: significant barriers still exist, both within London and across the whole of the country. Today was an important milestone. But the hard work begins now.
Key proposals from the Strategy
- A £1bn programme to accelerate the development and uptake of next generation digital infrastructure — including full fibre and 5G.
- Putting digital skills on the same legal basis as literacy and numeracy and ensure that digital skills qualifications made available under the adult education offer are free of charge to adults in England who need them and do not have these core skills.
- A review of artificial intelligence (AI) to identify the critical elements for the successful development of AI in the UK and unlock the opportunities that it presents; and £17.3m new research funding for robotics and AI.
- A competition for fintech startups that are making significant developments in the financial inclusion field.
- Millions of new digital training places, delivered by industry, and a Digital Skills Partnership made up of government, industry and other partners working together on a common cause to improve digital skills at all levels.
- Creating 5 international Tech hubs to provide a platform for UK tech businesses to engage with the digital communities in these countries, build partnerships, and ensure they look to the UK for their international expansion
- A commitment to create a Secretary of State-led forum for government and the tech community to work together to spark growth in the digital economy — through innovation and the adoption of digital in the wider economy.
- A Business Connectivity Forum, to be chaired by the Department for Culture, Media and Sport, to bring together business organisations, local authorities and communications providers to help businesses access fast, affordable and reliable broadband.